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Amid ongoing enthusiasm for sports wagering equities, particularly among younger retail investors, a new exchange traded fund (ETF) addressing the segment is here.
The iBET Sports Betting & Gaming ETF (NASDAQ: IBET) debuted Tuesday, becoming the second ETF dedicated to iGaming and sports betting stocks. IBET is sponsored by Inherent Wealth Fund LLC, a San Francisco-based asset manager and issuer of thematic and sector-specific ETFs. CEO Jeffrey Kamys, who has more than 15 years experience in the fantasy sports, sports analytics, and sports industries, is managing the new fund.
IBET is an actively managed ETF that seeks to achieve its investment objective by investing, under normal circumstances, at least 80 percent of the fund’s net assets, plus the amount of any borrowings for investment purposes, in securities of companies of any market capitalization, including foreign issuers, that are engaged in the fund’s investment theme,” according to the issuer.
The incumbent fund in this niche is the Roundhill Sports Betting & iGaming ETF (NYSEARCA:BETZ), which debuted in April 2020 and has $346 million in assets under management, as of Nov. 16.
Competition Brewing Between IBET, BETZ
Whether the market can sustain two sports wagering funds remains to be seen. But while that gets sorted out, there’s potential competition perking between the established BETZ and the new IBET.
Few new thematic funds in recent memory had timing as good as that enjoyed by BETZ. The Roundhill fund debuted while many land-based casinos were shuttered by the coronavirus pandemic — a scenario that fortified the online casino’s investment thesis. Additionally, BETZ was well-timed, because multiple members of the fund’s roster went public after the ETF debuted, putting more eyeballs on internet casino and sports betting stocks.
The new IBET charges 0.79 percent year, or $79 on a $10,000 investment. That’s four basis points above the expense ratio on BETZ. That difference is likely attributable to the fact that IBET is actively managed, while BETZ tracks an index.
Other Differences Between IBET, BETZ
IBET and BETZ have other notable differences. For example, the largest holding in the new ETF — DraftKings (NASDAQ:DKNG) — commands just 3.89 percent of that fund’s weight, while the biggest component in BETZ — Rush Street Interactive (NYSE:RSI) — occupies 5.75 percent of that fund.
IBET’s top 10 holdings range in weights from 2.84 percent to 3.89 percent, while that spread in BETZ is 3.59 percent to 5.75 percent. The new ETF has no top 10 holdings in common with its older rival.
IBET also holds some names, including Las Vegas Sands (NYSE:LVS), Melco Resorts & Entertainment (NASDAQ:MLCO), and VICI Properties (NYSE:VICI) that investors don’t readily associate with sports wagering.
“A company is deemed to be engaged in the Fund’s theme if (i) it derives a significant portion of its revenue (greater than 50 percent of revenue) or market value (devotes at least 50 percent of its capital) from the theme of the betting, sports, sports entertainment, and/or iGaming industries and/or technology or (ii) it has stated its primary business to be in products, services, or technologies focused on the theme of betting, sports, sports entertainment, and iGaming,” according to Inherent Wealth Fund.